Good day, ladies and gentlemen, and welcome to the SQM Second Quarter Earnings Conference Call. My name is Ana, and I will be your coordinator for today's call. As a reminder, this conference is being recorded for replay purposes. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Mark Fones, Vice President of Finance and Investor Relations. Please proceed, sir.

Good afternoon, everyone, and welcome to SQM's First Half 2012 Earnings Conference Call. For your information in this conference call will be recorded and is being webcast live. You may access the webcast later on at our website, www.sqm.com. Joining me today as speakers are Eugenio Ponce, Senior Commercial Vice President; and Ricardo Ramos, CFO. Before we begin, let me remind you that statements in this conference concerning the company's business outlook, future economic performances, anticipated profitability, revenues, expenses or other financial items, anticipated cost synergies and probable service land growth together with other statements that are historical facts, are forward-looking statements, and that term is defined under federal securities laws. Any forward-looking statements are estimates reflecting the best judgment of SQM based on currently available information and involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Risks, uncertainties and factors that could affect the accuracy of such forward-looking statements are identified in the public filings made with the Securities and Exchange Commission, and forward-looking statements should be considered in light of those factors. We are pleased to announce that SQM posted strong results during the first half of 2012. Earnings totaled $342.2 million or $1.30 per ADR, an increase of 40.5% with respect to the same period in 2011. Furthermore, gross margin reached $531.9 million 43.9% of revenues and 33.9% higher than the amount recorded during the first half of 2011. Revenues totaled $1.2 billion for the first 6 months, representing an increase of 17.6% over what was reported in the same period of 2011. We also announced that year-over-year earnings increase of 45.4% for the second quarter of 2012, reporting quarterly net income of $192.2 million. Gross margin for the second quarter reached $295.7 million, 41.1% higher than the amount recorded for the same period of 2011. Revenues totaled $683.3 million, an increase of approximately 23.9% with respect to the second quarter of 2011. Our first half 2012 results, the response to increased margins in all of our business lines compared to the first half of 2011, our potassium, lithium, and industrial chemicals business line showed the volume growth while prices continued to increase for our iodine and Specialty Plant Nutrition. Operator, we may go now to Q&A session.

[Operator Instructions] And our first question comes from the line of Fernando Ferreira with Bank of America Merrill Lynch.

I have 2 questions. Actually, first one, it seems that the premium of the SPN division relative to potash has been increasing lately and I would like to know if that's the case? And if so, if you can tell us where these premiums are today and why they have been increasing lately?

Yes, that is correct. Fones speaking. SPN products have been increased, the price this year compared with last year around $50. And this has been because markets accept this, and also, we increased our prices of potassium sodium nitrate in Brazil. And we signed several contracts there with the premium price compared with last year. That has been the increase on prices of the specialty plant.

And do you expect this premium to be maintained going forward or you're going to increase more?

We believe this premium will be maintained in the short term.

Okay. And then my second question would be on lithium. I'd like to understand a little bit better what's your strategy going forward in the market as SQM is nearly running at full capacity in your plant. So I'd like to understand better your strategy for pricing, if you're going to follow price increases going forward, and also regarding the consolidation that we have been seen in the sector in the past few weeks.

We will keep our current business strategy in lithium. As you have seen in our press release, our prices increased in 2012 compared with 2011 around 10%. However, we see that in short-term prices to remain same. Now we are, of course, demand of lithium, as you know, is expanding, is improving year-by-year. Therefore, we are already starting expansions in our production facility, that we will announce in the near future.

And our next question comes from the line of Giovana Araujo with Itaú Corretora.

My first question is on iodine. What prices do you expect until the end of the year and for 2013? And can you give us an overview of the whole market supply situation and what you believe will be the structure of prices going forward?

Yes. We see that prices will remain stable for the rest of the year and most probably also for next year. We see that demand is still growing and is growing more or less at the same pace that in the last years, you will see a little bit of recovery in certain markets in certain uses for iodine next year, but were a little bit low this year. So demand could grow a little bit more next year than this year. Now as you also know, there are some newcomers that were publicly announced that they will, in the market, mainly recommend now in the second semester. And also I think it was in the previous conference call, also was mentioned by SQM, so they will capture part of this growing demand.

Okay. And my second question. The question is about potash. What do you expect in terms of volumes for the -- to deliver volumes until the end of the year? And how you see the demand on potash market globally over the next 12 months considering the situation in Asia, the prospects for Brazilian purchase and also the situation in the U.S. market?

Well, potash, we actually, we are a very small producer of potash. We just follow the big ones and regarding prices. Now regarding volumes, you see that this year, demand will be lower in general terms than last year. And we are following what the big producers are doing. We're mainly selling in the surrounding countries. We sell very few in Asia, very few tons in Asia, and we concentrate with our small volumes in the surrounding countries.

Okay. In that context, do you expect some decrease in price, stable prices for the next -- for the rest of the year?

We expect the prices, for us will remain stable for the rest of the Q.

And our next question comes from the line of Juan Tavarez with Citi.

Two questions for me. I mean, first, to get a little bit of your view of what you're seeing today in terms of demand from Brazil for fertilizers. If you can maybe give us some insight of how you're seeing those customers, how is kind of the inventory situation in Brazil and the dynamics there of accepting these premiums in SPN prices and potentially for potash.

In Brazil for our SPN product, we have seen a very good demand. We have a new association with a French company, Roullier, it's called SQM VITAS, that is working mainly in the northern part of Brazil. We built a new plant, therefore, we have with several agronomists that worked with new joint venture a very high and rich defense that we can call to many, many customers that we didn't have before. Therefore, our sales in that market is increasing. Now regarding MOP, we -- I mean, the situation is that there were some announce of price increases by the suppliers of MOP. So really, we haven't seen but those price increases. Therefore, prices has remained stable as they were before, and we think for the second semester that will be the case. I may be wrong, but we think that.

And regarding your strategy where you are expecting to sell 50% of your potash in granular form, what's the eventual target? Is it to reach much higher than that? Do you have a target for 2013 of maybe reaching 60% or 70% or is 50% kind of your cap at this point?

Yes. Actually, our target is to increase above 50%, so maybe 60%, 70% as granular. That's why we made investments. The investments are there who have a very good quality today and has been accepted by the clients. Those that was in a start-up period of any new plant, and now we are selling with a very good quality and, therefore, our target is to go to 60%, 70% of all our MOP sales to be granular.

And could you give us some insight on the difference in pricing of granular and standard? In terms of the premium or...

Well, of course. If you have a standard product, you have to go to countries like China, India, Europe. You have gathered approach [ph], you can go -- I mean, from Chile, if you were a Chilean producers, okay, you can go to neighboring countries like Brazil, Peru, the lower Mexico, Argentina, pay a premium price compared with China, India, Europe, only by standard. Therefore, that can give us another touch increase of margin of $50 granular compared with standard.

Okay, perfect. And just my last question. Could you tell us what current spot prices are for iodine?

I will usually say, talk about prices, but you can see it in the press release, I think.

So spot prices are close to $55, is that the response?

I don't want to, if it -- but we prefer not to comment about prices.

[Operator Instructions] And our next question comes from the line of Tim Tiberio with Miller Tabak.

My question, I guess, is regarding SPN volume recovery in the second half. Obviously, you've been realizing higher prices with a better product mix, but in the first half, you had been highlighting some issues in key end markets, particularly in the fruit and vegetable markets in Southern Europe and also Mexico. Have you seen any material improvements in those markets since you last reported?

Okay. We have -- if you can see it in our information we sent to the market, that second quarter has been better than first quarter. That's the first statement I want to make. Now we see that in certain markets, there will be certain recovery, mainly Mexico, for instance. And we see that second half of this year will be slightly better than second half last year in terms of volumes. In terms of prices, stable prices.

Okay. And then on the industrial side of the business, can you perhaps give us an update on how some of these solar salt projects are going? It seems like you saw a nice sequential boost within that segment. Is that primarily being driven by the implementation of some of those projects in the full -- threw back to your business?

Can you repeat the question? I didn't -- I don't want to have any misunderstanding. Can you repeat it, please, the question? I didn't get the last part of your question.

The last part of my question is just -- are you seeing demand pull-through from some of the solar salts projects that you've been talking about? You've obviously seen a nice sequential improvement quarter-over-quarter in the industrial segment. Just trying to get a sense of where that's coming from and whether that will continue in the second half.

Okay. Yes, the solar salts will continue in the second half, and it will be better than in the first half for this year.

Ladies and gentlemen, with no further questions, this concludes today's question-and-answer session. I would now like to turn the call back to Mr. Mark Fones for closing remarks.

Well, thank you all very much for joining us today. We hope to have you with us in the next conference call. Goodbye, everyone. Thanks.

Ladies and gentlemen, we thank you for your participation in today's conference. This concludes the presentation and you may now disconnect. Have a good today.